Recovering Losses
Caused By Investment Misconduct

Stifel, Nicolaus & Company Fined $750,000

Posted on Apr 21, 2016 6:59am PDT

Stifel, Nicolaus & Company was fined $750,000 by the Financial Industry
Regulatory Authority after allegations of failing to properly account
for customers’ assets in a reserve fund and those held in a propriety
trading account. The firm is also accused of using the assets as collateral
for bank loans they obtained between 1999 and 2012 and not properly accounting
for the use of the assets.

According to the signed Letter of Acceptance, Waiver, and Consent, the
firm allegedly failed when calculating the necessary amount of money for
its Proprietary Accounts of Introducing Brokers and Dealers (PAIB).

During a five-week period in 2012, Stifel would have required roughly $36
million had the substitution of customer securities not occurred. In another
instance between March of 2013 and November 2013, the firm allegedly miscalculated
the requirements for its PAIB, leading to what is called “hindsight
deficiencies,” so named because the firm did not have enough money
in the reserve deposit account.

Under federal law, broker-dealers that use assets of customers as collateral
must properly maintain a reserve account for customers. This is supposed
to make sure that investors will be paid should the firm have to undergo
liquidation. Failure to have sufficient funds in the reserve deposit account
is a significant regulatory violation.

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